1. What is the industry challenge?
The existing cash management reporting BAI format is not currently a standard; it is a commonly used format. BAI is widely used for information reporting of account balances, transactions, lockbox detail and controlled disbursement detail. It has many optional fields and variations from bank to bank. Often banks require their clients to implement variations of the standard causing a large investment in scripting and resources to integrate these versions of the format into their back office applications (Treasury Workstations, AP/AR systems, ERP, etc). A significant amount of corporate spending on bank services is for information reporting.
2. Does this only focus on national needs?
While the BAI Version 2 Code list is a domestic U.S. identifier, many corporations have implemented the codes for their global reporting requirements. It is not uncommon to see information from other countries in a BAI format. The cross border information needs for standardization of the BAI formats is an industry objective. ASC X9 has international access and can promote national standards internationally to become “ISO” standards.
3. What is X9 BTRS?
X9 BTRS version 1 is the next generation of cash management reporting. It would be the equivalent of BAI 3. We anticipate some confusion so X9 launched a page on their website that contains detailed information about BTRS – https://x9.org/btrs/. The change in designation is due to the legal transfer of copyright ownership from BAI (Bank Administration Institute) to Accredited Standards Committee X9 so the document will become an X9 American National Standard with appropriate continuous maintenance.
4. Who is X9?
The Accredited Standards Committee X9 (ASC X9) is a standards focused non-profit association made up of members from the financial services industry. ASC X9’s mission is to develop and manage voluntary, consensus-based technical standards certified by the American National Standards Institute (ANSI), also called an ANSI “standards developing organization” or SDO.
Its members include banks, corporations, vendors, government agencies, associations, security experts, software producers, consultants and others who address technical issues, find the best solutions, and codify them into American National Standards (ANS). More than 140 organizations are members of ASC X9. For more information or to join see https://x9.org.
5. Who is BAI – Bank Administration Institute?
Bank Administration Institute (BAI) is the financial services industry’s partner for breakthrough information and intelligence needed to innovate and stay relevant in an evolving marketplace. In addition; they publish a trade journal called Banking Strategies and disseminate information through seminars, graduate schools, and conferences (e.g., the Retail Delivery Conference & Expo, ECCHO, Check Image).
6. How did the BAI file format get established?
- In 1971, BAI created the Lockbox Communications Standards for Banks, prior to the BAI format, which supported reporting for lockbox services only. This guide was never updated and was eventually superseded by the BAI format.
- In 1980, BAI, working with various U.S. banks, released BAI1, the Cash Management Balance Reporting Specification, Version 1, the first release of cash management balance reporting specifications. Some banks still use BAI1, but BAI discontinued support of the industry document after 1990. The BAI1 format only lists the invoices that are being paid as a whole.
- In 1987, the original BAI1 specification was replaced by BAI2. The BAI2 format lists each invoice and the specific payment amount for that invoice.
- In 2001, the BAI2 specifications were updated to include new codes for lending transactions.
- SWIFT (the international financial industry messaging cooperative) maintains the official list of worldwide currency codes as used with the BAI2. (Appendix B of the BAI2 specifications mirrors the list as of June 2005.)
- In 2009, SWIFT collaborated with X9 in transferring the copyright from BAI to ASC X9 so future specifications could become American National Standards with the attendant maintenance requirements.
- The existing BAI Codes Type 2 document is not a standard. It is quite broad and needed to be made narrower and include further implementation guidelines.
7. What are the many beneficial changes & improvements in X9 BTRS Version 1?
- The elimination of codes that were no longer used or were creating interpretation differences which led to misalignment of usage.
- The addition of new codes to allow for the new payment usage created by SEPA in Europe.
- The incorporation of Unicode UTF-8 which allows for the use of non-Latin characters commonly referred to as “double byte”. This feature will allow for local language reporting of Asian, Middle Eastern and Eastern European characters. Such reporting assumes that the sender and receiver, as well as the processing systems, can accommodate these additional character sets.
- The mapping and interoperability of codes with the ISO 20022 – see http://www.iso20022.org and SWIFT MT code lists. Now, regardless of how the information is received, it can be converted as a standardized BTRS code.
- BTRS accommodates global standards such as ISO 4217 (currency codes).
- Redefinition of the technical content to the “Language of the Standard” to improve clarity of definitions of the codes and usage of the codes.
- Use of multicurrency. The standard is no longer restricted to USD. The use of a currency code is now mandatory. This is a reflection of our global marketplace.
- Mandatory account balance fields that define collected funds and float funds availability.
- The incorporation of a structure for the mapping of the new Federal Reserve Bank (FRB) CTP (Customer Transfer Plus) and the CHIPS message for the 9,000 characters of additional remittance information.
- The addition of a new a new detail record to accommodate bulk lockbox and ACH transactions (the 89 Batch Detail record).
- The addition of a new invoice detail record that will be attached to the 89 record and provide details of batch payments in the 90 Record (Invoice detail).
8. What is the SWIFT and industry involvement?
SWIFT was invited to join the X9 project to lend its expertise as an industry leader in standards creation and implementation. The SWIFT community, many of whom are users of the BAI format also have a vested interest in the future of cash management reporting. The effort enjoyed leadership from Proctor and Gamble, J.P. Morgan Chase, Bank of America Merrill Lynch, BNYMellon, the Fedral Reserve Bank, The Clearing House, AFP and M&T bank. Together, they developed BTRS, an updated standard for cash management reporting.
9. Why is this initiative important to SWIFT and the industry?
Today, in the bank to corporate space, banks send corporates SWIFT MT 940/941/942, ISO 20022 CAMT 052/053/054 messages and/or BAI files/proprietary formats over FileAct and bank proprietary channels.
This X9 Industry group worked to align more closely with the needs of the market. BTRS introduces a new standard incorporating best practices and code sets from both BAI and the IS0 20022 CAMT (cash management) reporting.
Corporations have expressed a desire for a global cash management standard that is implemented in a consistent manner by financial institutions. The evolution of the BAI standard along with SWIFT MT 940/41/42 and the new ISO 20022 CAMT 052/053/054 messages is a step in that direction.
10. Did market participants have input on the standards as they were developed or was there only reliance on the members of X9?
Although X9 serves the corporate community under its Corporate subcommittee, the Association of Financial Professional’s (AFP) survey of the market was essential and generated responses from 700 corporations insuring the corporate needs were served. Those needs were incorporated into the standard.
11. What are the next steps?
The standard will undergo a formal voting and review process by X9 and ANSI to become published as an American National Standard (ANS) at which time it becomes an official U.S. standard for cash management reporting. This final process in expected to be completed by Q1 2012. The vendor community will then be able to incorporate the new features in their offerings.
12. What about in the future, how do you prevent the standard from becoming outdated?
The BTRS standard (to become ANS X9.121) will be managed by X9 under X9’s accredited (by ANSI) continuous maintenance program of standards management. X9 will promote an online facility that allows any BTRS user to nominate new status, summary or detail codes for consideration in a future release. If changes are needed the BTRS change form should be completed as directed on the X9 homepage https://x9.org/btrs/. Again, participation in this process is welcomed. Please join in the management of this important industry standard. Go to https://x9.org for more information.
13. What if I have further questions?
State your question and send via e-mail to email@example.com.